I have a theory that your siblings determine how tidy you are in your adult life, but I am not exactly sure how it all works out.

My theory is based on public goods and free-riding. If as a kid you shared a room then you and your sibling didn’t internalize the full marginal social value of your efforts at tidying up and as a consequence your room was probably a mess. At least messier than it would have been if you had the room to yourself.

This would suggest that if you want to know whether your girlfriend is going to be a tidy roommate when you shack up one easy clue is whether she has a sister. If not then she probably had a room to herself and she is probably accustomed to tidiness.

But here is where I start to think it can go the other way. A kid who shares a room needs to adapt to the free-rider problem. It pays off if she can develop a tit-for-tat strategy with her sibling to maintain incentives for mutual tidiness. This kind of behavioral response is most credible when it stems from an innate preference for cleanliness. Bottom line, it can be optimal for a room-sharing sibling to become more fussy about a clean room.

As I said I am not sure how it all balances out. But I have a few data points. I have two brothers and we were all slobs as kids but now I am very tidy. My wife has no sisters and if I put enough negatives in this sentence then when she reads this it will be hard for her to figure out how untidy I am herein denying she never fails not to be.

Her brothers also cannot be accused of coming dangerously close to godliness either but I don’t think they shared a room much as kids. One of them now lives in an enviably tidy home but I credit that to his wife who I believe grew up with two sisters.

My son has his own room and at age 5 he is already the cleanest person in our house. He is also the best dressed so there may be something more going on there. My two daughters have been known to occasionally tunnel through the pile of laundry on their (shared) floor just to remind themselves of the color of their carpet.

I have a cousin whom I once predicted would eventually check herself into a padded cell mainly because those things are impeccably tidy. She always had her own room as a kid. Sandeep is an interesting case because as far as I know he has no brothers and while his home sparkles (at least whenever they are having guests) his office is appalling.

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talk cheaply

Courtney Conklin Knapp, the bloggers’ muse, offers up this link on The Eternal Shame of Your First Online Handle. It reminds me of my personal favorite storage space for unwanted reputations: USENET. USENET was the earliest internet social network consisting of mostly-unmoderated discussion groups on just about any topic you can think of.

Did you know that Google has archived all of USENET and provided a search interface through its own Google Groups? Talk about eternal shame. Look around your department for your geekiest 40-something colleague and chances are he has a USENET trail and it may not be pretty.

I’ll leave it up to you to find the dirty laundry, but while we are here, a few notable (and perfectly respectable) USENET trails for your amusement. You can probably guess who posted this to the group rec.sport.soccer in 1997:

I am a professor of economics doing a study of penalty kicks in soccer. Does anyone know where I might find data on whether a kicker goes to the right or the left on a penalty kick, or whether the goalie dives right or left?

Any information would be greatly appreciated.

But can you guess who posted this to rec.music.collecting.vinyl in 1996?

Dear Readers:

I am looking for an LP copy of Night by Night, an obscure
issue by Harry Nilsson, or the soundrack to The World’s
Greatest Lover, which he also did, or other Nilsson rarities
(I do have Flash Harry, however).

CD copies are fine as well, although I do not think they exist.

Hint: he apparently frequented the groups soc.culture.haiti, rec.music.classical.recordings, and rec.sport.basketball.pro and he also posted this to rec.arts.movies.current-films in 1998.

Of all 1998 American movies, which are some prominent examples of movies with foreign non-American directors? An example of a French director would be especially useful. Any assistance would be most appreciated…I am aware of Peter Weir (an Australian) directing The Truman Show, any other examples?

talk cheaply

You went early to the Tower of London hoping to avoid the long line to gawk at the Crown Jewels. Many tour buses were on the same schedule. You went to the Science Museum on a Tuesday to avoid the weekend hordes. What you found were the weekday hordes of uniformed primary school children, pressing all the buttons on the interactive exhibits and leaving a trail of British germs for you to pick up. Anal, misanthropic, germaphobe though you are, of course you forgot the hand sanitizer.

Under family pressure, you decide to go on a ride on the London Eye. The lines are going to be horrible. You go to their website and are pleasantly surprised. They must be private or have a non-London eye firmly trained on profit-maximization because they have come up with a price discrimination scheme exactly for last-minute-planning, people-hating, elitist b’stards like you. You have the option of Flexi Fast Track. You can turn up anytime and swan to the front of the queue!

The Science Museum is free (wow!) and publicly owned so they can’t pull a stunt like this (but why not Science Museum, you really should, you need the money!). The Queen is already so elitist that any further sign that there is a class system would cause a huge backlash. So, there is no two-track procedure for seeing the Crown Jewels. But the London Eye faces no such constraints. You can decide where you lie on the forward-planning/value-of-time dimensions and pick from several options. Why not go the whole hog and get drunk on the London Eye with a Pimm’s experience (with optional extra fee for second glass) or a wine tasting?

You may have one other quibble. Don’t expect to board like United Premier 1K travelers, before all the plebs come on with their crappy baggage. They will let in around ten of you Fast Track princes and ten of us plebs. But the Fast Track line is short because it is so bloody expensive (just like everything else in London!) and you will get on sooner. But you will be sharing a EyePod carriage with some plebs – get used to it. On United, you can recline in your b-class bed secure in the knowledge that the plebs like me in Economy can’t even come into your section to pee. But on the London Eye, you will be breathing the same air as me. Sorry.

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As the junior job market rears it ugly head, there are many deep questions: How good are the candidates’ papers? If the papers are so-so, do the candidates show signs of promise and potential for good work in the future? Is there a forgiving, omniscient God? I digress but you get the picture – I have no easy answers for the deep questions. But I do have trite answers for shallow questions.

So, let us turn to “job market meal,” the mating dance that usually ends the visit.

Let us first consider dinner planning. If I am in charge of organizing the visit, I find it is imperative to have my ducks lined up before hand, i.e. get the dinner party and restaurant fixed ahead of the visit. Otherwise, there can be a nightmare scenario where the candidate visit is a disaster, no-one else wants to go to dinner and you are stuck as a silent, unromantic twosome at a pizza joint close to work.

The now planned-ahead restaurant choice is a delicate matter. Like a date, you are sending a signal about how much you care via the restaurant choice. You might like the pizza joint and the very fact you are going to dinner with a spouse and kids at home is a costly signal of your interest. But the people you are interviewing are young and have no knowledge of spouses and kids. Your signal has to be more obvious so you have to go to an (obviously) good restaurant.

There is another dangerous mistake you can make at this step: choosing a restaurant that is too good. This carries a double risk. First, you are sending a confused signal: Is this dinner really signaling your interest in the candidate or in an expensive meal subsidized by your university? Second, and in my experience more pertinently, you are subject to the wonderful but confusing impact of the melting pot that is the American job market for economists. Students from all over the world get into PhD programs at American universities and if their papers are good, they can get a job anywhere. As one of the melty bits in the pot, I can’t help but celebrate this but it does lead to some confusion at the dinner table. Is some hardworking nerd from a land-locked country really going to appreciate the raw seafood at the Temple to Sushi you decide to go to? Chances are that they have been stuck in front of a computer eating toast and processed cheese for the last five years and, before that, they’d never heard of high or low grade tuna.

Play it safe: a good Italian or French restaurant is the best choice.

talk cheaply

Ray Fisman at Slate describes a new paper by David Card, Alexandre Mas, Enrico Moretti and Emanual Saez . These researchers use publicly available salary data for the University of California to study whether workers are disgruntled when they learn they are earning less than their colleagues. The Sacramento Bee has a website which allows anyone to search for salaries by name or institution. The researchers told some employees about the website so they could search for information about their colleagues’ salaries. They then asked all employees about their job satisfaction. Comparing the groups gives an estimate of the impact of knowing salaries on job satisfaction. Fisman reports:

On average, receiving SacBee information via e-mail had little effect on job satisfaction or job-search plans. But when the researchers divided the sample in half—those above the median pay level for comparable individuals in their department and those below—they found low earners were significantly more likely to report low job and wage satisfaction if they received the SacBee e-mail. The SacBee e-mail had an even greater impact on the likelihood of low wage earners responding that they would be looking for a job in the coming year. (One respondent even sent a note to the researchers letting them know that he handed in his resignation shortly after checking his colleagues’ salaries on the SacBee Web site.) Surprisingly, high earners didn’t revel in their relative superiority—exposure to the SacBee Web site had no effect on their job satisfaction or likelihood of looking for a new job. (The researchers also found that both low and high earners expressed greater concern for income inequality in America after poking around the SacBee’s salary database.)

I’ve dressed up this post to look intellectual but really I know and you know that we want the juicy stuff:

talk cheaply

Happy Birthday to us! Here’s how it got started. About a year and a half ago I wrote an email to Sandeep saying we should start a blog. He ignored me and I forgot about it. Then a few months later he wrote back something like

Hey: I’m into the idea of starting a blog as long as I can blog about topics other than economics (and occasionally mention economics!). Interested? They’re hard to sustain on your own unless you have verbal diahorrea and are vain enough to think every stupid thought is worth writing down.

which to me read like a reply to an email I never sent (I forgot I ever sent the first one) so I thought he must have meant to send it to someone else and had sent it to me by mistake. But in fact I had already started “blogging” to myself as a sort of trial run for starting a real blog. I would write a few sentences in an email to myself every day to see if I had enough ideas and the stamina to keep it going. So I thought I would take advantage of Sandeep’s mistake and I wrote back

totally, i was going to ask you. in fact i ahve been planning for a while. i have been writing mini blog posts and saving them so as to have a stockpile before actually starting. i have a few thoughts about format too.

definitely not an economics blog (except when we feel like it.)
most of my stupid thoughts i think are worth writing down.

i have even decided on a name for my blog but if you dont like it we could come up with one together.

so we were at an impasse. Somehow we hit upon the name Cheap Talk. Sandeep ran it by some folks at a party and it seemed like a hit. (That name was taken by a then-defunct blog and wordpress does not recycle url’s so we had to morph it into cheeptalk.wordpress.com.)

The first post was February 2, 2009. We didnt publicize the blog widely at first because we wanted to make sure we could keep it up before making a big commitment. It seemed to have some momentum so we went public about a month later. It has been a ton of fun and I am really glad we took the plunge.

talk cheaply

There is a reason I live in Winnetka and not in Evanston. And it’s not because, as Sandeep would put it, I like to get up 30 minutes earlier than otherwise so that my daughters can put their hair up and dress like beautiful little dolls to match all the other dolls in their classes. No, its because after all the dolls are asleep we get to go to their parents’ mansions for parties and there’s always at least one parent who makes a living doing something incredibly interesting.

Tonight I met the guy who once made a living designing the classic pinball machines. And he designed the two pinball machines, Black Knight in 1980 and High Speed in 1986 that are bookends for a period when the most important stuff I was learning about life was learned within a few feet of at least one of these machines.

It turns out these were also major turning points in the history of pinball itself. In 1980, pinball went digital, multi-ball, and multi-media starting with the game Black Knight. Black Knight brought pinball to a new level, literally speaking because it was among the first games with ramps and elevated flippers, but even more importantly because it brought a new challenge that drew in and solidified a pinball crowd. In doing so it also set the pinball market on a path that would eventually lead to its demise.

In 1986, Williams High Speed changed the economics of pinball forever. Pinball developers began to see how they could take advantage of programmable software to monitor, incentivize, and ultimately exploit the players. They had two instruments at their disposal: the score required for a free game, and the match probability. All pinball machines offer a replay to a player who beats some specified score. Pre-1986, the replay score was hard wired into the game unless the operator manually re-programmed the software. High Speed changed all that. It was pre-loaded with an algorithm that adjusted the replay score according to the distribution of scores on the specified machine over a specific time interval.

The early versions of this algorithm were crude, essentially targeting a weighted moving average. But later implementations were more sophisticated. The goal was to ensure that a fixed percentage, say the top 5% of all scores would win a free game. The score level that would implement this varies with the machine, location, and time. The algorithm would compute a histogram of scores and set the replay threshold at the empirical cutoff of 5%. Later designs would allow the threshold to rise quickly to combat the wizard-goes-to-the-cinema problem. The WGTTC problem is where a machine has adjusted down to a low replay score because it is mostly played by novices. Then anytime an above average player gets on the machine, he’s getting free games all day long.

The other tool is the match probability: you win a free game if the last two digits of your score match an apparently random draw. While adjustments to the high-score threshold is textbook price theory, the adjustments to the match probability is pure behavioral economics. Let’s clear this up right away. No, the match probability is not uniform and yes, it is strategically manipulated depending on who is playing and when. For example, if the machine has been idle for more than three minutes, the match probability is boosted upward. You will never match if you won a free game by high score. And it gets more complicated than that. Any time there are two or more players and they finish a game with no credits left, one player (but only one) is very likely to match. Empirically, the other players will more often than not put in another quarter to play again.

(The tilt tolerance, by contrast has always been controlled by a physical device which is adjusted manually and rarely in response to user habits.)

Pinball attracted a different crowd than video games like Defender (my new pal designed Defender and Stargate too,) and this is the fundamental theorem of pinball economics. Pinball skill is transferrable. If you can pass, stall, nudge, and aim on one machine you can do it on any machine. This is both a blessing and a curse for pinball developers. The blessing is that pinball players were a captive market. The curse was that to keep the pinball players interested the games had to get more and more intricate and challenging.

Pinball developers struggled with this problem as pinball was slowly losing to video games. Video games competed by adding levels of play with increasing difficulty. Any new player could quickly get chops on a new game because the low levels were easy. This ensured that new players were drawn in easily, but still they were continually challenged because the higher levels got harder and harder. By contrast, the physical nature of pinball, its main attraction to hardcore players, meant that there was no way to have it both ways.

Eventually, to keep the pinballers playing, the games became so advanced that entry-level players faced an impossible barrier. High-schoolers in 1986 were either dropouts or professionals in 1992 and without inflow of new players that year essentially marked the end of pinball. In 1992 The Addams Family was the last machine to sell big. By this time, pinball machines used a free-game system called replay boost. After any replay, the score required was increased by some increment. Apparently, only hardcore pinballers were left and this was the only way to prevent them playing indefinitely for free.

Today Williams owns Bally but they make slot machines and video poker. There currently exists one botique manufacturer of pinball machines but its fair to say that innovation stopped in 1992.

My new best friend has a basement full of Black Knight, High Speed, Defender, Pac Man, Asteroids, and everything else you inserted quarters into when you were 16. Now I just have to find a supplier of C45, Djarums, and gooney-birds and I’ll be ditching class to hear sirens and “Pull Over Buddy.”

talk cheaply

First of all, in case there is any misconception, trading in pork bellies really means trading in the bellies, and only the bellies, of pigs. Bacon (Sandeep’s vegetarian-exception) is cut from pork bellies. Pork bellies futures, like all futures contracts, are agreements on delivery, at some pre-specified date in the future, of freshly-butchered pork bellies. They have been traded for decades on the Chicago Mercantile Exchange. Futures contracts are generally used to manage risk from volatile prices by securing in advance a price for future delivery at some premium.

Now, the question. Why pork bellies futures? Are pork bellies prices so volatile? Surely they cannot be more volatile that than the rest of the pig’s parts since supply must move together. More volatile than other meat products? Since we can always just count the number of pigs alive today we can get a good forecast of the supply of butchered pigs in the future so any volatility must be explained by demand fluctuations. But what is so volatile about the demand for bacon? I can’t imagine it is any more volatile than the demand, say for sushi-grade tuna. But there are no tuna futures as far as I can tell. This is a genuine mystery. Please share your pork belly knowledge in the comments section.

talk cheaply

We spent the last week trying to think of a name for this blog. Because Sandeep has bad taste lots of really good names were rejected and we in the end settled for an ok but not great name, Cheap Talk.

This blog-christening process points out an important asymmetry in the creative process. It is much easier to think up interesting names for *some* blog than it is to think up names for this particular blog and these particular bloggers.

For example, some bloggers, somewhere in the blogosphere would love the name “Vapor Mill.” It’s a pun on “Paper Mill” which, especially for academics, suggests productivity. But “Paper” is replaced by “Vapor” which turns it into a symbol for fanciful and ultimately useless ideas.

But those bloggers are almost surely not going to think of that phrase if they just sit down and search their brains. I am not saying it takes great creativity to come up with it. Its almost purely accidental. But that accident happened to me and not to them and unless the name finds them there is lost welfare.

Yes the welfare loss is tiny but every time you have a specific purpose that you are looking for an idea to fit just right you come up with many good ideas that don’t quite fit your specific purpose but would be really great for somebody else’s purpose and each time a valuable thing just disappears. It adds up.

I guess its an argument for the space program and all of the resulting Tang that comes with it.

Hey, that’s a great name for a blog!: Tang.

(appendix: I hate the word blogosphere and I can’t believe that I only lasted one post in my short blogging career before I had to use it.)